The Revenue Versus Cash Businesses – a Case Study

by | General

Revenue have a long history of targeting cash businesses when it comes to compliance issues, as a Tax Appeal Case with a Fast Food outlet demonstrates.

The Background

In November 2006 Revenue officials called to the location of a fast food restaurant and conducted an examination of the operator’s till readings.

  • Based on the turnover indicated on the till read outs, Revenue compared the this figure to declared income on tax returns in previous periods.
  • The turnover figure for the day in question according to the till was €3,223 – previous tax returns had indicated an average weekly turnover of €5,425
  • Furthermore the restaurant closed early on the night of the Revenue visit, so actual takings for the night would have been higher.
  • Revenue also stated that the tax payer had understated his purchases and they had information that there were unrecorded cash transactions from a particular supplier.

These purchases suggested that the sales figures were under declared.

  • Revenue also discovered €99,998 of sales which were not included in the 2007 accounts.
  • Based on the sales figure for that night, Revenue issued Income Tax and VAT assessments for previous periods, which they indicated had been under-declared.

Taxpayers Position

In response to the position of Revenue, the taxpayer made the following statements.

  • He said on the particular night that Revenue visited the restaurant, a very popular band was playing in the nearby university hence the takings were up.

However when revenue looked at the turnover for some previous Fridays, it was similar to the night in question, furthermore they could not find any evidence of a band playing that night.

  • The taxpayer could not explain the list of purchases that Revenue had received from a supplier which did not appear in the business accounts. These were described as “van” or “yard” sales.
  • With regard to the 2007 understatement of sales, the taxpayer put it down to a mistake by a clerk working for his accountants. There was no corroboration of this from the accountants, neither did they appear at the appeal.

 Revenue Position

  • The taxpayer in his submission claimed that the revenue assessments were excessive, and that Revenue had a duty to justify their figures.
  • However counsel for Revenue responded by emphasizing that it fell to the taxpayer to prove on the balance of probabilities, that the assessments were made in error.
  • Revenue cited the well-known case of “Menolly Homes v Revenue Commissioners”.
  • Revenue had acquired Invoices, which were either handwritten or typed, from a supplier to the Taxpayer, and submitted them as evidence of undeclared purchases.

A representative from the suppliers declined to appear at the appeal, but legislation allows Revenue to furnish evidence which would not be permitted in court proceedings.


  • The commissioner called into question the veracity of the supplier invoices procured by Revenue and excluded them from the process.
  • The Taxpayer showed no evidence from his Book-keeping system to support his claim that the Tax Returns he submitted for previous years, were correct.
  • The Taxpayer is obliged by law to keep proper books and records.
  • Regarding the alleged error by his accountants who failed to record sales of €99,998 in the relevant year, no evidence was produced to support this and nobody from the accountants in question appeared at the appeal.


The commissioner found that the assessments raised by revenue for the relevant years stood affirmed.

What about today, that was back in 2006?

Revenue have indicated recently that there will be a greater focus on cash businesses going forward, many of these will take the form of visits to business premises where interrogation of E.P.O.S. systems will take place.

Next month we will look at Revenue Powers to conduct these on-site visits, and the rights of the taxpayer.

Please reach out if you have any queries regarding these scenarios, or indeed, if you require any tax advice.

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